Wednesday, September 30, 2009

It's becoming clear that Google Wave, which is slowly emerging from closed beta, has potential to be much more than a text-messaging platform. As the telecommunications platform company Ribbit shows, and as does a frothy little videoconference app from 6 Rounds, Wave's architecture makes it a compelling platform for real-time streaming communication.

The Ribbit team recently showed me their prototype widget, which lets Wave users quickly set up a conference room inside a "wave" message on the service. Once you add the Ribbit conference widget to a wave, everyone in it becomes part of a potential voice chat. Users need to enter their phone numbers, which remain hidden from other users. Then anyone in the wave can call all the participants at once to start a conference. (Users can also call only particular people in the wave, if they wish.)

Tuesday, September 29, 2009

For those who still doubt that the price of gold is manipulated by the Central Banks and in particular by the Fed here in a document from 1975 that makes for interesting reading. Will gold's rise be managed this time round?... so far it has been but it only takes one Central Bank to start buying (none are selling) and the pressure will be on. These are high stakes, a rapid rise in the gold price will kill the bullion banks who are shorting.. there is the possibility of global dislocation... who will be winners and who losers? can the US$ be allowed to fall by as much as 50%? ...People hold your gold and buy more if you can..

Digsby, the multi-network IM and social media tool has been updated with tighter Facebook integration and added support for MySpace IM. This is good, but the really great news is that dotSyntax has also removed the confusion mess of crapware nags from their installer.

The new installer now gives you an option to install the ‘Digsby Toolbar’ and asks if you want to contribute unused CPU cycles to sponsored research. While all of the adware/sponsor programs used in the old Digsby installer were optional, the new installer makes opting out easier and more obvious — a real plus considering that most users don’t really read the fine print during installation.

If we’re right about where the price of gold is headed, the general public will someday clamor to buy all things gold. While gold stocks will be where the real leverage is, the rush will start with gold itself. As a gold editor, I have a very natural question: is there enough to go around?

According to the U.S. Census Bureau, there are 6.783 billion earthlings. Meanwhile, CPM Group, a highly respected industry organization, estimates there are 4.8 billion ounces of above-ground gold in the world. And this includes jewelry, electronics, and dental. So, even if everyone around the world volunteered to have their chain, cross, or tooth melted into a coin, we’re already short. Those towards the end of the line are out of luck.

However, it’s worse than that. Of all the physical metal ever mined…

2.1 billion ounces, or 43%, is found in jewelry, decorative, and religious items.

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Here is a declassified CIA document from 1968 which shows the importance of gold within the financial system and how governments try to manipulate it… nothing has changed despite the decoupling of gold from the dollar.

Monday, September 28, 2009

Unemployment benefits have masked social hardship unto now but these are starting to expire with cliff-edge effects.The jobless army in Spain will be reduced to €100 a week; in Estonia to €15.

Whoever wins today's elections in Germany will face the reckoning so deftly dodged before. Kurzarbeit, that subsidises firms not to fire workers, is running out. The cash-for-clunkers scheme ended this month. It certainly "worked".

Car sales were up 28pc in August, but only by stealing from the future. The Center for Automotive Research says sales will fall by a million next year: "It will be the largest downturn ever suffered by the German car industry."

Fiat's Sergio Marchionne warns of "disaster" for Italy unless Rome renews its car scrappage subsidies. Chrysler too will see some "harsh reality" following the expiry of America's scheme this month. Some expect US car sales to slump 40pc in September.

Weaker US data is starting to trickle in. Shipments of capital goods fell by 1.9pc in August. New house sales are stuck near 430,000 – down 70pc from their peak – despite an $8,000 tax credit for first-time buyers. It expires in November.

Rickards was asked to analyze an essay published in Friday's Wall Street Journal by Fed Governor Kevin M. Warsh (yes, the Fed governor who this month acknowledged to GATA that the Fed is concealing records of its gold swap arrangements with foreign banks). That essay can be found here:

Rickards construed Warsh's essay to mean that the Fed will be seeking to regulate the gold price closely even as the Fed needs to devalue the dollar by about half over the next 14 years to restore solvency to the United States.

The purpose of the Fed, Rickards remarked, is to inflate the dollar to prop up the banks; claims that the Fed's purpose is to achieve "price stability" are manifestly nonsense. Central bankers, he added, now plan to turn the International Monetary Fund's Special Drawing Rights into the new world reserve currency replacing the dollar, a new round of money printing to create some stability in the world financial system during the dollar's steady but gradual and controlled devaluation.

Rickards said he expects gold to go to $2,000 but added, "When you own gold you're fighting every central bank in the world."

So, predictably, Gold was hammered ahead of the “G-20” (nice little acronym for a criminal ruling elite, isn’t it? – more like mafia family heads getting together if you ask me) meeting in Pittsburg, Pennsylvania this weekend. What didn’t help matters (for Gold bugs i.e.) was the fact that 24th September was the expiry day for options with a large amount of open interest near the $1000 level, which BTW, were in the money on the 24th morning prior to “the attack” at 10 a.m. EST. The big banks who wrote the contracts pummeled Gold in order to pocket the premium of whoever was complacent/stupid enough to hold them into expiry thinking that the banks were about to let go of an opportunity to pillage the little guy.

There are a few statistics that you can look at to see actual human pain in the real economy. You can look at the recent stock market rally yet even a 50+ percent rally is unable to create jobs or stem the economic pain of those at the lower end of the economic spectrum. Looking at food stamp participation from the United States Department of Agriculture shows us a very disturbing picture. When we did a report on this in August of 2009 we had 34 million Americans on food stamps. In the span of one month, the number jumped by over a million.

The raw data shows us that a stunning 12 percent of our entire population is receiving some form of food stamp assistance. The program is now called Supplemental Nutrition Assistance Program but the theme is still the same. Let us look at some of the raw data:

JUST 10 years after establishing diplomatic and trade relations, China has overtaken the US, Japan, Germany and the UK to become SA's biggest trading partner, according to the latest figures from the Department of Trade and Industry.

Trade volumes with China between January and July have reached R32,4bn, followed by the US with R21,7bn, Japan's R19,7bn, Germany's R17,5bn and the UK's R15,2bn. This indicated an increase in SA-China trade of 11,95% from 8,45% in the same period last year.

The US was SA's major trading partner only briefly, in the 2006- 07 financial year, after taking over from the UK, which had held the number one spot for a long time.

Americans cannot get any truth out of their government about anything, the economy included. Americans are being driven into the ground economically, with one million school children now homeless, while Federal Reserve chairman Ben Bernanke announces that the recession is over.

The spin that masquerades as news is becoming more delusional. Consumer spending is 70% of the US economy. It is the driving force, and it has been shut down. Except for the super rich, there has been no growth in consumer incomes in the 21st century. Statistician John Williams of shadowstats.com reports that real household income has never recovered its pre-2001 peak.

The US economy has been kept going by substituting growth in consumer debt for growth in consumer income. Federal Reserve chairman Alan Greenspan encouraged consumer debt with low interest rates. The low interest rates pushed up home prices, enabling Americans to refinance their homes and spend the equity. Credit cards were maxed out in expectations of rising real estate and equity values to pay the accumulated debt. The binge was halted when the real estate and equity bubbles burst.

As consumers no longer can expand their indebtedness and their incomes are not rising, there is no basis for a growing consumer economy. Indeed, statistics indicate that consumers are paying down debt in their efforts to survive financially. In an economy in which the consumer is the driving force, that is bad news.

Sunday, September 27, 2009

Russia on Friday unloaded evidence from the Arctic Sea ship onto a Russian warship, as mystery still surrounded the identity of its cargo one month after it was recovered from alleged pirates.

“The evidence will be delivered to a Russian port, where the warship Ladny and its escorting vessels will dock,” the investigative committee said in a statement posted on its website.

“It includes ammunition used by the suspected pirates to capture the ship and the speedboat from which they boarded it. The boat was camouflaged on board the Arctic Sea under a wood frame and canvas,” it said.

Now, I’m not quite sure why the evidence couldn’t have been put in one of the three military transport aircraft that were needed to bring the 20-odd crew members and alleged hijackers from the Cape Verde Islands to Russia earlier this month. Initial reports of the ’speedboat’ were that it was a Zodiac-type boat, which shouldn’t present any obstacles from being muscled onto an IL-76. Those reports certainly could be wrong though (this story is riddled with holes so relying on any piece of the story is fraught with all sorts of risks).

Saturday, September 26, 2009

Daniel Gross

I found it tough to get excited about the first anniversary of the Lehman Brothers failure. That's because events in the weeks after Lehman's face-plant were more consequential, and much, much more expensive.

Last October, first responders—the Federal Reserve, the Treasury Department, the Federal Deposit Insurance Corporation, Congress—flooded into the financial sector. They deployed every weapon in their arsenal, and invented some new ones, to stanch the panic: loans, subsidies, direct bailouts, free money, the TARP. In so doing, they exposed taxpayers to massive immediate and potential liabilities. This year's deficit is projected to be $1.58 trillion. The Federal Reserve's balance sheet has swelled from about $880 billion pre-crisis to $2.1 trillion today. Add in the stimulus and all the other measures, concludes Nomi Prins, a former Goldman Sachs managing director and author of the bailout critique It Takes a Pillage, and the public could be on the hook for up to $19.3 trillion.

Yes, there certainly will be. Burns estimates there will be a “large numbers of foreclosures” that will drive home prices down 6% next year. Analyst Ivy Zelman pegs the number of coming foreclosures at three million to four million homes over the next few years.

All of the voluntary foreclosure moratoriums have slowed “the flow of properties headed toward foreclosure sales” regardless of deep in distress borrowers are. These delays only work to prolong the mortgage crisis and prevent prices from falling to more natural levels.

Thus, it creates a “growing ’shadow’ inventory of pent-up supply that will eventually hit the market.”

Some pretty big news came out on Thursday (9/24/09) regarding a seemingly obscure program to end what were called "currency infusions."

In fact, these are "currency swaps," and you might want to pay attention to them, because of their high degree of correlation with the rise and fall of the dollar. Currency swaps also offer the perfect vehicle for central banks to engage in currency intervention and manipulation, especially if one of the parties (*cough*US*cough) has a massive trade imbalance and lacks sufficient FOREX reserves to use in daily market intervention activities.

Friday, September 25, 2009

The first time around, the three-headed federal serpent – the Bush administration, the Treasury Department and the U.S. Federal Reserve – used Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) to “legitimize” trillions of dollars worth of toxic financial waste known as subprime mortgages.

The result was the worst financial crisis since the Great Depression – a mess that was global in nature.

And we’re now headed for a repeat performance.

Some of the players may have changed since the firstsubprime-mortgage crisis, but the game apparently remains the same. With banks currently unwilling to lend, the new federal triumvirate of the Obama administration, the Treasury and the Fed are trying to inflate the moribund U.S. housing market. This time around, however, the FHA is the weapon of choice.

Obama & Co. are making an all-or-nothing bet that the U.S. economy will recover and bail out the housing market before the final bill for this ill-advised gambit comes due.

In news that could greatly extend the range of electric cars, researchers have shown that replacing the conventional graphite electrodes in lithium-ion batteries with silicon nanotubes can produce a battery that can store ten times more charge. The researchers developed a silicon anode that, aside from extending the range of electric cars, could also make gasoline-electric hybrid vehicles more efficient by allowing them to run in electric mode for longer periods.

The researchers say that, if the new silicon anode can be matched to a cathode with similar storage capacity, the resulting battery should be able to power a car for three or four hours without recharging. This is a marked improvement of six to eight times on today’s technology, which sees the battery in a current, typical hybrid car lasting only 30 minutes.

Google continues to come up with new ways to present Web content, or let even users interact with the Web content they find.

Following last week's launch of the maligned (unfairly, I believe) Google Fast Flip news-reading experiment, is Google Sidewiki, a browser sidebar launched from the Google Toolbar that lets users make comments on the content they stumble upon in Web searches.

Users can start comments on a Web page and, much like they can with Google Reader, share their comments via e-mail Twitter, Facebook. Or, users may simply read what others have to say about content. Sundar Pichai, vice president of product management at Google and Michal Cierniak, engineering lead for Google Sidewiki, noted:

What if everyone, from a local expert to a renowned doctor, had an easy way of sharing their insights with you about any page on the web? What if you could add your own insights for others who are passing through?

Thursday, September 24, 2009

Run for your lives! The buck is burning, the greenback is crashing, the almighty dollar is in danger of going the way of the British Pound as the world's No. 1 reserve currency. Or so say the dollar doubters. Are they right? Only time will tell, but the foundering dollar is having a very salutary effect on equities -- at least for now.

The U.S. Dollar Index, which measures the greenback against a basket of six major currencies (you can see the related exchange-traded fund here UUP), fell to a one year low ahead of Wednesday's Federal Reserve meeting. Little wonder there. As long as the Fed continues to print money through a zero-interest-rate policy and so-called quantitative easing, the U.S. continues to run a big trade deficit, and other nations move their foreign exchange reserves out of dollars, the buck has no place to go but down.

That's great news for gold bugs and commodity traders. Anything denominated in dollars, like gold and oil, goes up when the greenback falls.

Of more importance to retail investors and their 401(k)s is that a soft dollar boosts stock prices. There's a simple explanation for that: 50 percent of the S&P 500's revenues and 40 percent of its earnings come from foreign sources -- so a weak dollar bodes well for both top- and bottom-line corporate performance.

The CLIQ is a Google Android smartphone with a 3.1-inch touchscreen display and a full QWERTY slide-out keyboard. Building on the timid path that the T-Mobile G1 and myTouch 3G (both built by HTC) laid before it, the CLIQ combines the best elements of those Android-based devices and improves on the worst.

To me, the CLIQ is a power user’s dream phone: it combines touch and keyboard for choice of input; it offers Microsoft Exchange support as well as built-in Google services integration; it’s got robust support for images, audio and video; it offers Wi-Fi, Bluetooth and 3G GSM connectivity.

Adding to that solid Android feature set is Motoblur, a Motorola interface that’s built on top of the Google platform. Much more than a skin, Motoblur preserves most of the Android experience but allows Motorola to compete more directly with the Palm Pre and Apple iPhone on certain fronts. Like webOS on the Palm Pre, Motoblur bases contact and conversation between people on an identity, rather than the protocol (IM, e-mail, text, etc.). Similarly, Motoblur uses a feed-based widget architecture to surface content on the home page, rather than require you to dive into an app.

After it has spent nearly a year on the market, analysts are reluctant to declare Android a success, but they say the platform could turn a corner in the next few months when many more phones are expected to go on sale.

Google and T-Mobile unveiled the first Android phone, the G1, at an event in New York City on Sept. 23 last year. The device hit stores a month later.

One million G1s were sold in the first six months, and almost the same number may have been sold in the period since, said Carl Howe, an analyst with the Yankee Group. In August this year, T-Mobile introduced the second Android phone, the MyTouch, which like the first was made by Taiwan's HTC. There are now more than 10,000 applications in the Android Market.

But Android hasn't yet lived up to the expectations set by Google, and some analysts say it doesn't yet present serious competition to Apple's market-leading iPhone.

This chart is arguably the best way to look at the dollar's value vis a vis the currencies of our trading partners, because it uses a very large basket of currencies and makes adjustments for cross-border inflation differentials. As you can see, the dollar is about 7% above its all-time low, a level that has provided solid support three times in the past.

In today's world of floating currencies, almost every currency rises and falls against other currencies at one time or another. But a currency that is persistently weak or continually falling relative to others presents a problem. If the dollar's value were to continue to fall to new lows, eventually this would trigger rising inflation pressures. Indeed, supply-siders usually assume that any significant decline in a currency's value (particularly against gold) is a sign of easy money and therefore rising inflation risk. That's because inflation can be defined as the loss of purchasing power of a unit of currency.

Weak and falling currencies are also bad for growth, since they scare away investment. Who wants to invest in a country if there exists the real possibility that one's investment will be eroded by a falling currency? At the very least investors require special incentives (i.e., premiums) to invest in an economy with a weak currency.

Wednesday, September 23, 2009

The crimes that South Africans fear the most -- attacks at their homes, places of work and cars -- have substantially increased, national crime figures released by Police Minister Nathi Mthethwa yesterday revealed .

Mthethwa, making a special statement to the National Assembly, said that small and informal businesses had borne the brunt of the crime wave. Robberies at these categories of businesses accounted for more than 66% of robberies at non- residential premises.

While murder and attempted murder continued their downward trend with decreases of between 3% and 4%, more than 18000 South Africans were still killed between April last year and March this year.

Robberies, as opposed to burglaries, from businesses were up a staggering 41,1%, robberies from homes 27,3%, carjacking by 5% and truckjacking 15,4%. Robberies from larger businesses, bank robberies and cash- in-transit heists were down as these entities were more able to take measures to protect themselves, while smaller businesses were largely defenceless and were almost certain to have cash on the premises.

The federal government and states are girding themselves for the next foreclosure crisis in the country's housing downturn: payment option adjustable rate mortgages that are beginning to reset.

"Payment option ARMs are about to explode," Iowa Attorney General Tom Miller said after a Thursday meeting with members of President Barack Obama's administration to discuss ways to combat mortgage scams.

"That's the next round of potential foreclosures in our country," he said.

Option-ARMs are now considered among the riskiest offered during the recent housing boom and have left many borrowers owing more than their homes are worth. These "underwater" mortgages have been a driving force behind rising defaults and mounting foreclosures.

"Thedollar looks awfully like sterling after the First World War," said David Bloom, the bank's currency chief.

"The whole picture of risk-reward for emerging market currencies has changed. It is not so much that they have risen to our standards, it is that we have fallen to theirs. It used to be that sovereign risk was mainly an emerging market issue but the events of the last year have shown that this is no longer the case. Look at the UK – debt is racing up to 100pc of GDP," he said

Crucially, China and rising Asia have reached the point where they can no longer keep holding down their currencies to boost exports because this is causing mayhem to their own economies, stoking asset bubbles. Asia's "mercantilist mindset" of recent decades is about to be broken by the spectre of an inflation spiral.

China is considering buying gold being offered for sale by the International Monetary Fund, Market News International said on Monday, citing two unnamed government sources, but the report could not immediately be confirmed.

"China will consider buying if the price is right and the return is relatively high," MNI quoted one of the government sources as saying.

Gold XAU=, which had dipped just below $1,000 an ounce, rebounded to $1,003.45 after the report. That would put the market value of the 403.3 tonnes on offer from the IMF at close to $13 billion.

"There was a small reaction to the news that China may discuss its gold plans at the G20, it recovered a little, but overall the market isn't overly concerned, not yet anyway," a Europe-based trader said.

China, the world's biggest producer and buyer of gold, revealed earlier this year that it had lifted its own stocks of gold to 1,054 tonnes from 400 tonnes when it last reported its holdings in 2003.

The IMF formally endorsed a plan on Friday to sell 403.3 tonnes of gold, one eighth of its holdings, to central banks or in the gold market.

Tuesday, September 22, 2009

Tired of the government bailing out banks? Get ready for this: officials may soon ask banks to bail out the government.

Senior regulators say they are seriously considering a plan to have the nation’s healthy banks lend billions of dollars to rescue the insurance fund that protects bank depositors. That would enable the fund, which is rapidly running out of money because of a wave of bank failures, to continue to rescue the sickest banks.

The plan, strongly supported by bankers and their lobbyists, would be a major reversal of fortune.

A hallmark of the financial crisis has been the decision by successive administrations over the last year to lend hundreds of billions of taxpayer dollars to large and small banks.

So speculative betting on gold going higher now equals a record-busting 752-tonne position in Comex futures and options, yet this is not a bubble according to Michael Pento of Deltaga.

Let’s say otherwise. Let’s say that gold prices, surging by almost $100-per-ounce in barely a month, are very much in a bubble…blown up by near-zero interest rates worldwide and a sharply negative cost of borrowing after inflation. Were that the case, the question before potential and existing investors would be simple:

It seems there can be no complete recovery of the housing market until the job market stabilizes. New data from Equifax, reported by Reuters news today showed that the rate of mortgage delinquencies is climbing, and climbing fast.

According to the source, 7.58 percent of all U.S. mortgages were delinquent by 30 days or more in August, an increase from July’s 7.32 percent. This is the fourth straight month of rising delinquencies, and the current rate is up dramatically from a year earlier when it was 4.89 percent. And two years ago, in August 2007, the rate was only 3.44 percent.

Here’s a graph from the Mortgages Unzipped blog that shows the delinquency trend over the past few years. It is definitely on the quick uprise.

Apparently there is a very high correlation between these recent figures and the rate of consumer bankruptcy filings. Bankruptcy filings rose by 32 percent in the past year according to Reuters.

If you know where to look, the American consumer is not buying into the U.S. Treasury and Federal Reserve great debt experiment. Port traffic is still declining and indicators show no sign of a major resurgence. If you look at the recent weak outbound pace of containers that are empty what we can expect is continued weak demand for imported consumer goods. Given that most of our goods are imported, this is a bad sign for our local economy but also global economies that produce those goods.

It is rather startling that so little focus has been given to job creation. 21 full months into the recession and there is still no concerted effort on stemming the massive unemployment problem. This issue is directly tied into the weak consumer demand. The American consumer is not in a spending mood. We can expand the access of credit available to banks but the access to credit is limited if they have no viable customers to lend to. Apparently banks now realize that giving money to those with no income history or capacity to pay debt back was a bad move. So why are they asking for so much liquidity even though they refuse to lend? The answer unfortunately is that they are borrowing liquidity to patch up their own problems. The American consumer is on their own.